"Because of the ramp up in fossil fuel prices in recent years, particularly oil and gas, we are starting, when you look at those more expensive commodities, to see that wind power is indeed competitive. But the biggest advantage it has is price stability. The price is known and there is virtually no other fuel that provides that."
Nova Scotia's attempts to bring more wind into its largely coal-fired electricity grid, however, have been frustrated by global hikes in turbine prices and by political uncertainly closer to home. Acciona Wind Energy Canada announced in December that its 31 MW Amherst project, first announced in August 2005, would not proceed as planned. "The large increase in the price of wind turbines, more than 25% in the last year alone, and the unforeseen absence of a formal announcement from the federal government with respect to the content of federal incentive policy support for the wind power production incentive program has led Acciona to determine that it will not be able to meet the economic terms of the original sales contract signed with Nova Scotia Power," the company says. Submitting a new bid in the utility's coming request for proposals (RFP) provides Acciona "with the best opportunity" for completing the project, it adds.
Meantime, NSP has cancelled the contract of a developer planning to install 6 MW of turbines in a disagreement over a C$150,000 performance bond. But neither situation has soured NSP on wind, says Murphy. "That is the way the markets work. There are going to be ups and downs, but we have many successful developers with wind projects dotted all across Nova Scotia."
The utility has just over 59 MW of wind either operating or in the process of final commissioning. Although Murphy says the latest RFP is part of a "continual striding forward" on the renewable energy front, it comes at a time when the provincial government is putting the finishing touches on a regulation requiring NSP and the province's six municipal distribution utilities to acquire 5% of their electricity from new renewable energy sources by 2010 and 10% by 2013. Last month the regulation was expected to be in place by February 1.
NSP says the 10% target "may not be technically achievable." Assuming the target was met with wind, the utility says it would require an installed capacity of 500 MW, about 20% of the existing generating capacity in the province. "There are not adequate electricity sources which have the necessary speed of response to follow the intermittent nature of coastal winds to maintain electricity voltage and frequency requirements," says the utility.
The cost of increasing its existing load-following reserves to also cover for wind fluctuations using gas-fired combustion turbines would cost an estimated C$23 million a year, argues NSP, while the added cost of "dispatching the system uneconomically" to accommodate wind could range between C$30 million and C$60 million a year. Murphy says the utility has no difficulty with the first phase for 5% renewables by 2010, but it is suggesting the province wait to evaluate that before going further.
"What we are really saying is: let's add a significant amount, let's go for 130 more megawatt, which I believe comes very close to if not approximating the first phase, and we'll learn a lot from that. Because it is a significant amount it will show us even further how wind is going to work. We want to have the best possible integration of the wind resource into our existing system. That is our goal."
The Canadian Wind Energy Association (CanWEA) rejects NSP's arguments about the cost and feasibility of the 10% target. "When it comes to questions of reliability and whether or not this can be done, I think we would totally disagree with this idea that it is not technically achievable," says CanWEA's policy and government relations director, Sandra Schwartz.
She points out that Nova Scotia has strong regional distribution of its wind resource, and that geographic diversity helps alleviate variability and reliability issues. "And it can be mitigated as well. That is the other side. We are learning in other provinces that there are mitigation measures that can be put in place as well," she says. "If they have concerns, well, they need to be working with the wind energy industry to deal with those concerns," she adds.